The Long Drift — Part 4: When the Ships Stop Coming

The trajectory of New Zealand's food system, if nothing changes

There is a reasonable counterargument to everything this series has argued.

It goes like this: New Zealand is a high-cost producer. Energy is expensive. Labour is expensive. Agricultural land values are among the highest in the world. Against that cost base, imported frozen spinach from Belgium, canned peaches from South Africa, butter from the United States — these aren't failures of the system. They are the system working as intended. We export what we're good at — premium dairy, grass-fed beef, world-class wine, kiwifruit, Manuka honey — and we import the commodity-end products that others can produce more cheaply. Comparative advantage. Basic economics.

Otago University senior lecturer Robert Hamlin made the point plainly: New Zealand is a high-cost producer, and from time to time food produced here can be accessed for considerably less overseas. ANZ agricultural economist Matt Dilly noted that NZ doesn't have a labour cost advantage or an energy cost advantage, and imports reflect that reality. Around one-third of fruit and vegetables consumed in New Zealand are now imported. That figure has been growing quietly for years. Both economists were quoted in a 1News piece published this week examining why imported food is often cheaper than the NZ-made equivalent.

These are not wrong observations. The economics are real. The cost pressures on NZ food manufacturers are real. The closure of Wattie's and McCain's processing facilities wasn't solely the result of supermarket ranging decisions — energy costs rose 300% at Wattie's over seven years, and the sustained inflationary environment made the cost-price squeeze increasingly difficult to manage.

The counterargument deserves to be stated clearly, because the response to it matters.

What the counterargument assumes

The comparative advantage argument is built on a foundation of assumptions about the global system that are not performing well right now.

It assumes stable shipping. Ships that once passed through the Red Sea in days now sail for weeks around the Cape of Good Hope. By May 2025, tonnage through the Suez Canal was still 70% below 2023 levels. The Strait of Hormuz — through which a third of seaborne oil passes and which connects NZ's South African and Asian food suppliers to global shipping lanes — saw war risk premiums surge more than 300% in early 2026, with a large tanker that previously paid around $100,000 for strait transit now paying over $400,000.

It assumes stable costs. UNCTAD estimates that global consumer prices could increase by 0.6% as shipping costs filter through supply chains, with processed food prices projected to rise by 1.3%. That's a global average. For a small island nation at the end of very long supply chains, the exposure is higher.

It assumes stable trade relationships. The United States — where NZ's new cheap butter comes from — is currently the most unpredictable trading partner in the world. Tariffs are being deployed as geopolitical instruments. Established trade flows are being disrupted by policy decisions made in Washington with no reference to their downstream effects on small open economies at the bottom of the Pacific.

It assumes stable geopolitics. UNCTAD warns that ongoing geopolitical tensions raise concerns about potential spillovers that could disrupt shipping activity in the Strait of Hormuz. Freight rates have become more volatile. Disruption and delay are becoming the norm.

And underneath all of it, it assumes that the processing infrastructure NZ is currently decommissioning could be quickly rebuilt if those assumptions stopped holding. That assumption is the most dangerous one of all.

What doesn't come back quickly

A cannery is not a warehouse. You cannot reconstitute a food processing operation in a season.

The Wattie's Christchurch factory, the Auckland factory, the Dunedin factory, the Hastings frozen packing lines — when these close, what disappears is not just the buildings and the machinery. It is the grower contracts, seasonal and multi-year, that gave orchardists and vegetable growers the certainty to plant. It is the workforce with the specific skills to operate the equipment. It is the agronomic knowledge — what varieties work, what yields are viable, what the rotation looks like alongside seed crops — that accumulated over decades of working the same land with the same suppliers. It is the seed stock and the crop breeding programs calibrated to NZ conditions and NZ processing requirements.

Canterbury produces more than half the world's supply of hybrid radish seed and 40% of the global carrot seed supply, exported to more than 60 countries. That capacity exists inside the same grower network that supplied Wattie's with process vegetables. The two are not separate industries — they share land, equipment, seasonal labour, and financing structures. When the processing contracts collapse, the ecosystem they supported becomes precarious in ways that extend far beyond the factories themselves.

Around 220 Canterbury growers were affected by the Wattie's closure. Around 100 Hawke's Bay orchardists received letters telling them their fruit was no longer needed — some of them supplying the same company for two generations. These aren't just contracts ending. They are the human infrastructure of NZ food production being released from the system. Some will pivot. Some will exit. The ones who exit take their knowledge with them, and it does not return when conditions change.

If NZ decided in 2035 that it needed domestic food processing capacity — because the ships became unreliable, or the South African peach crop failed, or the Thai corn supply was disrupted by flooding, or the American butter stopped being cheap — the question would be: rebuild from what? The land is still there. The climate hasn't changed. But the growers who knew how to supply a cannery, the factory workers who knew how to run the lines, the agronomists who understood the crop varieties and rotation systems — those people made other plans. Rebuilding from dormancy takes years. Possibly a decade. Possibly longer.

The endpoint: where the current trajectory leads

Let me be direct about what the trajectory produces if nothing structurally changes.

The supermarket duopoly continues to control 90% of NZ's grocery market, with no prospect of meaningful new competition. Container shipping in 2026 presents a mixed environment — overcapacity in some regions and shortages in others — with freight rates remaining volatile due to supply-demand shifts, fuel costs and global disruptions. In that environment, the tender logic that governs Pams and Value sourcing decisions continues to favour the cheapest global supplier. NZ food processors, operating in a high-cost environment with no guaranteed shelf space in the dominant retail channel, cannot invest in the capacity expansion that would make them competitive. The domestic processing pool narrows further. Offshore becomes not just cheaper but the only option in more categories.

As NZ food manufacturing retreats, the duopoly's private label expands to fill the space. The shelf still looks full. The brands are still familiar. But the proportion of that shelf sourced from NZ continues to decline — category by category, tender by tender, quietly, in ways that don't register as a crisis because nothing goes dramatically wrong in any single week.

Meanwhile the margin compounds. With less domestic manufacturing to anchor price competition in processed categories, the duopoly sets retail prices against its own cost base rather than against a competitive market. For net food-importing nations, higher freight costs quickly translate into more expensive imports and food insecurity. NZ is becoming a net food-importing nation in the processed categories — paying global export prices for what remains of its own production, and global shipping prices for the rest.

The consumer pays more for less. Not dramatically, not overnight. The drift continues. Food prices rose 4.5% in the year to February 2026. Meat, fish and poultry up 7.5%. The Grocery Commissioner found in September 2024 that retail prices were rising faster than what supermarkets were paying their suppliers. The margin is expanding at both ends — squeezed from suppliers, extracted from consumers — and the structural conditions that would create competitive pressure to arrest that expansion do not exist and show no sign of being created.

The world the economists aren't modelling

Hamlin's own words contain the warning he doesn't quite draw out: the international food market remains volatile because supply and demand are closely balanced globally, and disruptions in major importing countries could rapidly influence food prices in export-oriented markets such as New Zealand.

He is describing a fragile system. He is using it to explain why NZ imports are rational. Both things can be true simultaneously, and the tension between them is exactly the point.

NZ has chosen — not through any single deliberate decision, but through a thousand individually rational commercial decisions — to export its premium food and import its staples. To decommission its domestic processing infrastructure because it cannot compete on cost. To allow a duopoly to control 90% of its grocery market and make sourcing decisions based on margin rather than food security. To permit two generations of households to lose the cooking skills and food culture reference points that would make them resilient consumers in a disrupted supply environment.

Each of those decisions was defensible in isolation. Together they describe a food system that is becoming steadily more dependent on the continued smooth functioning of global supply chains that are, by every measure currently available, becoming less smooth.

Global shipping faces fragile growth, rising costs and mounting uncertainty. Political tensions, shifting trade patterns and reconfigured shipping lanes are reshaping the geography of maritime trade. Freight rates are high and volatile. Supply chains are fragile and port disruption is becoming chronic.

This is not a scenario. This is the current state of the system NZ has chosen to depend on for its domestic food supply.

What would have to change

The counterargument deserves one more engagement, because it isn't wrong about the cost problem. NZ food manufacturing is expensive. Energy costs are high. Labour costs are high. Land values are high. No amount of food sovereignty rhetoric changes the arithmetic of running a cannery in Christchurch against one in Chengdu.

But the counterargument treats the cost problem as a natural condition rather than a policy choice. Energy costs are partly a function of infrastructure investment decisions made over decades. Land values are substantially a function of a property market that has been allowed to run unconstrained. The duopoly's margin — a million dollars a day in excess profit, documented before the current wave of supplier dislocations — is not a law of nature. It is the outcome of a regulatory environment that has consistently failed to create the competitive conditions that would restrain it.

The Grocery Commissioner exists. The Supply Code exists. Neither has materially changed the structural dynamics this series has documented. The Commerce Commission concluded it saw little prospect of a new or expanding rival effectively constraining the major retailers. That conclusion is not an argument for accepting the status quo. It is an argument for the kind of structural intervention — mandatory divestment, new entrant support, public food infrastructure investment — that no government in recent memory has been willing to make.

What would have to change is political will. The food system's trajectory is not a weather event. It is a sequence of policy choices and regulatory failures that compound over time into something that looks, from a distance, like inevitability.

It is not inevitable. It is just very difficult to reverse once the infrastructure is gone.

The 100-year view

This series started with three founding stories — three acts of resistance against dependence and consolidation that became, a century later, the instruments of dependence and consolidation they were built to resist.

The wheel turned. Completely.

What happens in the next hundred years depends on whether anyone notices before the processing infrastructure is gone, the grower networks are dissolved, the cooking skills are two generations unexercised, and the ships that bring the cheap food from the other side of the world become the only remaining option.

Hamlin's warning, buried in an article about the economics of import competition, deserves to end this series: disruptions in major importing countries could rapidly influence food prices in export-oriented markets such as New Zealand. We are, in the categories that matter most for domestic food security, increasingly an importing country. The disruptions he describes as a theoretical risk are already happening. The Red Sea is already disrupted. The Panama Canal is already constrained. The Strait of Hormuz is already a geopolitical pressure point.

The ships are still coming. For now.

The question is not whether NZ should grow and process its own food. It is whether, when it becomes obvious that it should, the capacity to do so will still exist.

The peach trees are coming out of the ground.

The Long Drift is now complete. The full series:

Part 1 — What They Were Built For — Wattie's, Foodstuffs, and Pams were each founded to resist exactly what they've become. A 100-year arc.

Part 2 — The Brand That Ate Its Suppliers — Pams claims 68% local sourcing. The categories where it falls short are the exact categories where NZ food manufacturing was built.

Part 3 — Nobody Taught Them — When housing costs put both parents to work, the kitchen went quiet. The food system that filled the gap was built to last.

The full OFT evidence base for this series: When NZ Stopped Canning Its Own Peaches / Can New Zealand Feed Itself? / The Clean Green Country That Imports Its Dinner / You Wouldn't Buy Your Dinner From Temu / The Quiet Collapse Behind New Zealand's Frozen Vegetables / The Wattie's Closures Reveal a Hidden Link Between Your KiwiSaver and Your Food / New Zealand Isn't Just Importing More Ultra-Processed Food